Ford Has A ‘Skunkworks’ Team Building A Cheap EV To Compete With Tesla And Chinese Automakers

Ford 021c Concept
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Today’s issue of The Morning Dump is going to be Ford-heavy; we have a lot of Ford news today, and it’s all worth discussing. The most interesting? CEO Jim Farley let slip that the company has a secret startup company that’s developing a third-generation EV platform to take on Tesla and Chinese automakers.

If you’re a shareholder of Ford you may be more interested in the company’s news that it has enough cash on hand and credit to start handing out some sweet, sweet dividends and that it’s not going to spend quite as much on electric cars. If you’re a Ford dealer, you might be more interested in getting some answers from Ford itself, which maybe sorta didn’t happen at NADA (the National Auto Dealers Association meeting in Las Vegas).

And, finally, a non-Ford bit of news: Toyota is going to build its next three-row electric crossover thing in Kentucky.

Ford’s Big Bet On A Cheap EV To Beat The $25K Tesla And Inexpensive Chinese EVs

Ford O21c Green
Source: Ford

Ford Motor Company had its big earnings call yesterday, and the news was pretty good; we’ll get to that in a second. First I want to pick out something curious that Ford CEO Jim Farley said on the call.

Right now Ford is in the middle/end of its Gen 1 EV platform lifecycle, which is Mach-E, E-Transit, and F-150 Lightning. These are net money-losing exercises. Gen 2 will start production around 2025 and include the Ford T3 electric truck.

Here’s what Jim had to say about that in his call (full transcript here):

Now, someone portrayed the change in the EV market as Darwinian. That could be a slow evolutionary change, but we think this has been a seismic change in the last six months of last year.

That will rapidly sort out winners and losers in our industry. Now, the catalyst for that seismic change is a combination of EV manufacturers cutting their price by 20% across all major geographies and a tremendous amount of capital flowing and a ton of new capacity into one single segment, two-row crossovers. Our overall EV strategy has never been more relevant as the seismic change happens, and we want to share with you our targets. Our next Gen 2 products will be profitable in the first 12 months of their launch.

And that will mean that we’ll get to mid to high single-digit EBIT profit margins over their lifecycle. And that’s going to deliver profits above Model e’s cost of capital. And here are our big bets and adjustments. We’re going to spend less capital on larger EVs.

Ok, so if you’re going to spend less money on large EVs, what exactly are you going to be spending your money on, Ford?

We’re also adjusting our capital, switching more focused on to smaller EV products.

Now, this is important because we made a bet in silence two years ago. We developed a super-talented skunkworks team to create a low-cost EV platform. It was a small group, small team, some of the best EV engineers in the world, and it was separate from the Ford mothership. It was a start-up.

Ok, this is getting intriguing. Why are you doing that?

All of our EV teams are ruthlessly focused on cost and efficiency in our EV products because the ultimate competition is going to be the affordable Tesla and the Chinese OEMs. And that bet and all of the rightsizing of capital and even delays to some of our products, given the market realities, better balance growth, profits, and returns for us.

Given the huge advantage that Chinese OEMs and Tesla have in development how, exactly, do you build a Gen 3 product that can compete? Especially when Tesla says it’s targeting a price of $25k for its next cheap EV and, you know, Chinese automakers have plenty of sub-$25k EVs.

Kirsten Korosec over at TechCrunch has a lot of details in her piece, which identifies ex-Tesla exec Alan Clarke and ex-Tesla/Auto Motive Power founder Anil Paryani as the people leading this project. The startup is separate from Ford and based out of Irvine, California.

It seems like Ford wants to have a dedicated platform that’s small and features relatively cheap batteries to get the maximum range out of minimum cost, which isn’t a bad idea.

Ford Beats Earnings Expectations, Declares Increased Dividend

Jim Farley Ford

How did Ford do overall last year? The company reported approximately $176 billion in revenue for 2023, up about 11% from $158 billion in 2022. Net income was up to $4.3 billion, compared to a loss in 2022, but adjusted EBIT (Earnings Before Income Taxes/Interest) was flat at $10.4 billion. That’s enough to earn a higher bonus check for UAW workers of about $10,416, up from 2022.

Ford says it’s sitting on a good amount of cash, and declared a dividend of $0.15 per share for Q1 and a supplemental dividend of $0.18 per share.

Here’s the company’s projection for 2024:

Ford anticipates full-year adjusted EBIT of $10 billion to $12 billion and to generate $6 billion to $7 billion in adjusted free cash flow, with capital expenditures of $8 billion to $9.5 billion.  The guidance presumes flat to modestly higher full-year U.S. industry volume, with overall lower vehicle pricing.  Upsides include beneficial pricing and mix from 12 months of sales of the all-new Super Duty that Ford Pro introduced during 2023.

That’s a little better than most analysts were expecting. Just FYI, Ford is now divided into Ford Blue (hybrid- and gas-powered cars), Ford Model e (electric cars), and Ford Pro (work vehicles).

The market is responding positively to both the revenue expectations and, seemingly, the strategic walking back of EV expenditures.

Ford Irks Some Dealers At Dealer Meeting

Elena Ford
Source: Ford

This last week was the National Auto Dealers Association meeting in Las Vegas and Ford, which has been trying to improve its relationships with dealers, had a bit of a mixed performance according to this Automotive News report.

On Friday, CEO Jim Farley asked a group of dealers who operate smaller Ford stores for “open and honest” feedback and vowed to spend two weeks traveling the U.S. to meet with as many of them as possible. Elena Ford, the company’s chief dealer engagement officer, acknowledged the group wasn’t happy on a number of fronts and promised change.

The next day, however, some dealers who attended Ford’s larger make meeting left disgruntled after executives offered few specifics on hot-button issues such as electric vehicles or quality improvements. The officials also failed to take questions from the dealers, in a break from the company’s standard practice

Generally speaking, if you’re going to have a meeting with a group that doesn’t feel listened to, uh, you should listen to them. Maybe Ford should set up a Discord like we did.

Toyota To Build New 3-Row EV In Kentucky, is it the Lexus TZ?

Lexus Tx Vs Rendering

Toyota’s main manufacturing facility is Toyota Kentucky in lovely Georgetown, Kentucky where the company pumps out endless Camrys, RAV4 Hybrids, and Lexus ES variants.

Kentucky’s place in Toyota is pretty secure as the company just announced:

Toyota announced a $1.3 billion investment at its flagship Kentucky facility for future electrification efforts including assembly of an all-new, three row battery electric SUV for the U.S. market.

[…]

The investment supports the previously announced future BEV assembly at Toyota Kentucky. It also adds a battery pack assembly line to the facility, with batteries being supplied by Toyota Battery Manufacturing North Carolina.

That’s not a lot of detail, but we suspect it’s the 2026 Lexus TZ that was trademarked last year.

What I’m Listening To While Writing TMD

Man, I love The Highwaymen so much and their eponymous “The Highwayman” is so good. Why am I thinking about this first album? Well, it’s definitely because Toby Keith died and I read this:

Oh man, why would you mess with Kris Kristofferson? Especially after he killed all of those vampires… I also love the idea of Willie Nelson shrugging mischievously next to Ray Charles while all this is going on.

The Big Question

The big debate we had today was which old Ford concept to use for the topshot. I ultimately went with the 021C because it’s a bright color and just stands out so well, which pissed off Adrian. I’ll let you guess what Adrian picked, what Jason chose, and then would love to hear what you’d have done.

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115 thoughts on “Ford Has A ‘Skunkworks’ Team Building A Cheap EV To Compete With Tesla And Chinese Automakers”

  1. Ford screwed their chance at making a cheap EV when they put the Focus on death row. The Focus if lengthened in the wheelbase slightly would’ve easily fit under $25,000. Anything bigger would’ve cost too much. And the problem is they’ll still be poaching batteries from the profitable EVs, making them less inclined to make it.

    Also Jason totally chose the Probe III.

  5. The 021c is kind of like the Buick LeSabre concept of the ’50s – it represented the peak of the aesthetic of the era. Bright, rounded, vaguely retro, organic forms, that’s the late ’90s. Look at it and you can hear Spice World.

    As a concept it has aged better than you might expect – fairly simple detailing helps – but this was pure, uncut 1999.

  6. I’m all for focus on cheap EVs. Let’s call them CHEEVs (pronounced cheevy) and Ford came name this distinct skunkworks something different, like after a planet or something. I know, name it Uranus, because we all know things come out different from Uranus.

  7. The cheapest Ford on the lot at my local dealer is $31k so I’m guessing their idea of a cheap EV is $40k. As a lifelong Ford guy before they killed their cars off and is in the market for an EV; I think I’ll pass.

  9. “I ultimately went with the 021C”

    What I remember from that concept is how hard it flopped and how pissed Jac The Knife Nasser was that it flopped. I recall reading that he said that he blamed the media and the public for ‘not getting it’.

    But the reality is… as a concept car, the only good thing about it was the paint. Aside from that, it sucked.

    2. I fucking hate it because it’s always used by bollock skulled shit weasels as evidence that car designers/OEMs don’t know what they’re doing.
      We can build that for you if you like, but it’ll cost $150k and we can only make fifty a week, and the repair costs will be extortionate because of all the unique parts in the BoM.

        1. It’s not really my area of expertise, but essentially the more unique trim and features a car has, the less commonality with the rest of the range and the harder it is to assemble (and inability to come down the same line as platform mates) the more expensive it gets to make.

          1. Ah, but now at the dawn of the glorious age of gigacasting, surely they can be quickly/ cheaply produced in two pieces, for the efficiency of Hot Wheels.

          3. I assume that if it had any hope of being made it would have been adapted into a new Fiesta and a lot of the unique components would spread through the rest of the range.

            That said, a production version someone would actually want to buy would have to be dramatically different. The trunk drawer is probably as unproduceable as it is impractical and interior as-is wouldn’t have met any safety regulations. I think the extremely 1999 styling works though.

      2. I fucking hate it because it is the crystallization of a certain chief designer’s disrespect for Ghia, before he closed Ghia down in favour of his stupidly expensive vanity project that went….

        …nowhere.

    3. I “got” it, but I “got” it inasmuch as I understood it as a packaging efficiency exercise. The 021C was designed to shove as much modular open space into a small car as possible, damn the regulations or conventionality of it. I don’t think people cared about that, though.

    4. I didn’t realize there are insane people who didn’t or don’t like the 021C. It’s literally the coolest concept car of the past 50 years. An absolutely perfect design. Inspired by the International Scout.

      1. “I didn’t realize there are insane people who didn’t or don’t like the 021C. It’s literally the coolest concept car of the past 50 years”

        It’s not cool. It sucks.

        “An absolutely perfect design.”

        It sucks ass.

        “Inspired by the International Scout.”

        Which also sucked ass.

        :-p

  10. Hmm. Cheap Ford. Interesting. A modern interpretation of the Escort wagon would be neat. Lots of utility in a small package. Although for crying out loud, make the load floor flat with the seats folded!

  11. 25 years later and I still want that orange Ford prototype car!

    I did get one of the 20,000 1991 Nissan Figaros. Also a silly design car. So not all bad here 😉

    1. Honestly, Ford probably could have had a legit cult hit on their hands if they treated the 021C as a Pike car and did an intentionally limited production run, keeping supply below demand. This was the peak blueberry iMac/iBook era, a certain demographic with money to spend would have gone nuts for it

      1. I don’t trust anyone who says they’re going to bring a desirable EV to market for $25K. I don’t trust anything Tesla has promised since the original “$35K Model 3” debacle.

      1. I think people naturally assume that the “$25K” Tesla is the price before incentives, at least that’s how I interpret it.

        Bringing an all-new US-standard model to market for that kind of money seems impossible unless it’s a dorky city car or something that few want to buy. It’s not like the Model 3 has a lot of features to pull out for savings.

        1. Given Tesla’s lead times for new models, they could be hoping inflation turns $25k into $35k by the time the car launches.

          Also, I do wonder if they could even sell an electric city car for that – would a smaller car really cost 46% less to build than a Model 3? Doubtful, the difference in production costs between smaller cars and larger ones is usually not that significant, automakers can only sell subcompacts for a lot less than intermediates if they intentionally take a lower profit margin or accept a loss leader to hook new customers.

          Unless Tesla builds it outside the US, but the only low cost country where they currently have a factory is China, and that brings tariffs into the equation, especially a problem if the price target isn’t really $25k MSRP, but $25k after government incentives

    5. It’s not a rumour… it’s has been formally announced as the next big thing Tesla is working on. It was on their last investor call when discussing 2023 financials as well as future plans. And it has been widely reported on as well:
      https://electrek.co/2023/12/05/elon-musk-low-cost-tesla-advanced-manufacturing-revolutionary/
      https://www.reuters.com/business/autos-transportation/tesla-plans-build-new-electric-vehicles-mid-2025-sources-2024-01-24/
      https://electrek.co/2023/11/06/tesla-plans-build-25000-electric-car-gigafactory-berlin/

      1. I have no doubt they’ve announced it, just as they announced the Semi and the Roadster 2.0.

        And I’m sure they are building something there, but whether it will actually cost $25,000 seems like a major question to me.

        1. Well the Semi is in production now and in customer hands. And the production of the Semi is expected to ramp higher this year. And they are expanding the Nevada site to achieve that.

          No mention of the Roadster though on that last investor call. My guess is they decided to do the high volume/lower price/smaller car first.

          Also, inflation is a thing. You have to account for it. A $25K car today will be more in a few years. Anyone with an ounce of common sense knows that.

          In my view, even if it goes on sale for US$30K and make money on it, it will be a huge success and a huge achievement..

          1. Has anyone bought a Semi? I remember they had a splashy reveal, hearing a bunch of truck drivers saying it was a terrible design and then they put all of their focus on Club Drive for the Atari Jaguar.

            The latter two events are likely unrelated.

              1. Jay Leno is not, nor has he ever been, an actual truck driver.

                The issues that real truck drivers have aren’t because it’s an EV, but because of the practicality concerns involving the central seating position and where the doors are located. Essentially, makes it more difficult to do practical things like backing up – cameras are nice but not a substitute for being able to judge first hand. The other main issue is that you have to leave your seat to do any interaction outside of the truck. Plus, the windows don’t roll down, only pop out. Paperwork is a HUGE thing with truck driving. Plus having the doors behind the driver makes getting in and out more difficult.

                One thing where an electric semi would be PERFECT is farm use, which is what I have the most familiarity with, but the cab design would actually make the Tesla Semi nearly unusable in a farm context.

                1. “Essentially, makes it more difficult to do practical things like backing up – cameras are nice but not a substitute for being able to judge first hand.”

                  Meh… that sounds more like “we’re not used to it so we don’t like it”

                  And unless those truck drivers work for Tesla or Pepsico, then there it’s unlikely they are speaking from actual first hand experience.

                  1. I will trust someone who has done a job for decades to know how to effectively do it safely.

                    And I do know that the cab would make it completely useless for common applications – because I’ve either done those jobs or have supported people who do those jobs.

                    1. “And I do know that the cab would make it completely useless for common applications”

                      And yet in spite of your claim that they are “useless”, Pepsico and their drivers manage to successfully use those trucks with those cabs every day.

                    2. I said for common applications, because trucks are used for more than shipping soda. For example, there are pickups where you have to handle all paperwork from inside the cab for safety reasons, and you can’t do that with only a flip-out window. Farm applications also require a ton of getting in and out of the truck, which is substantially more difficult in this than another vehicle.

                      See what I mean? Using it to haul Pepsi is an application where it can work – getting in and out is relatively minimal, fairly regular routes so you likely don’t have the toll problem, pretty robust infrastructure that can be adapted to the vehicle – but Pepsi isn’t all trucking.

                    3. Not to derail, but they are actually Lays/Cheetos trucks. I see one on my commute. Still purchased by PepsiCo but transporting mostly air vs mostly water.

            1. Yup… they delivered them late. But that’s typical with Tesla. They do deliver… eventually.

              And 2028 is also my guess for the true practical availability for this next gen smaller/cheaper vehicle.

  14. HA! Ford’s $20K Maverick Hybrid now has a starting price of $25,315, and it hardly has any batteries. The Lightning had a starting price of $40K and now it’s $50K.

    The only way it’ll be cheap is if it has a starting price of $10K-$15K because it’ll get a $5K-$10K price hike after the first model year or so. I sincerely doubt Ford will sell an electric car for $10K-$15K, and this is before dealer markups. Ford Blue will need to be in full swing for any chance at a “cheap” Ford BEV.

  15. 1.) Nothing about a FoMoCo meeting with dealers is ‘open and honest’.

    2.) When do I get a large luxury sedan out of Ford/Lincoln? Never?

    3.) Stop doing upmarket to your cheap vehicles, Ford. Get that basic Maverick back to the $20K mark. WE DON’T NEED A BIGGER TOUCHSCREEN! Put something with a hatch in the hybrid lineup that is designed for the plebes.

    Please. I’m begging you.

    3. The current 2020+ Escape is a thing with a hatch (successor to Focus) and has a hybrid option, and the 2023+ refresh gives it a bigger touchscreen (and nearly 0 buttons ????). It’s also super overpriced while arguably being a downgrade 🙂

      The Bronco Sport is the pre-2020 Escape’s successor.

  16. how, exactly, do you build a Gen 3 product that can compete?

    you know, Chinese automakers have plenty of sub-$25k EVs.

    That’s how. Make a design that meets US safety specs and have it built in China or wherever land and labor are cheap and disposable.

    Or build cars with robots.

    We developed a super-talented skunkworks team to create a low-cost EV platform. It was a small group, small team, some of the best EV engineers in the world, and it was separate from the Ford mothership. It was a start-up.

    Well by now you got the underpants. Good luck with phase two!

    Oh and milk that “startup” legend going as long as you possibly can. You can use it to excuse all kinds of terrible build quality, labor issues, and awful company culture.

  17. I’d have picked a Probe concept or one of the more practical Ghia ones – like Pockcar, Aerovan, APV.

    Unrelated to all this, the autoplay video – these are once again bogging down the page when I scroll, but on select videos. Right now it happens on every FJ Bruiser video, while no issues with the XPEL video like on the trade-in Tuesday. As I scroll past, the page slows down and things lock up, and if I scroll back up past it, happens again (and can’t pause it from loading because it just plays again). Anyone else experiencing this?

    1. No offense, but you are a maniacal masochist for not using an auto-play blocker. I get that the vids help the site somehow, but there are limits in life. lol.

      2. Actually I have tried/used one and it didn’t work for the videos here, so perhaps a recommendation would be more welcome. There aren’t many sites I regularly visit with autoplay videos at least in a regular browser session, like sites that beg you to turn off adblocker to read.
        It isn’t really the autoplay aspect I think, given the Xpel vid autoplays and doesn’t cause the same issues. Something with the video itself. The Xpel video is like 13min long vs. the FJ’s 3min so it’s not video length either.

          1. Thank you. The only way I’ve been able to get it to work so far is to basically black out the video so it wouldn’t be viewable at all in my browser, which is more than intended but still works and has improved the usability.
            Still, bloat from ads and autoplay videos was a complaint many with the old site. The addition of ads here hasn’t caused issues on times when I’ve viewed with them on, only their own videos have.

  18. In 2024, a crack engineering unit was sent to prison by Military Court for a crime they didn’t commit. These men and women promptly escaped from a maximum security stockade to the Deerborn underground. Today, still wanted by the government they survive as Engineers of fortune. If you have a problem, if no one else can help, and if you can find them….maybe you can hire The A-Team Ford’s Shunkworks EV Project team.

      2. Counterpoint: Dirty Work

        “Times are hard,
        you’re afraid to pay the fee.
        So you find yourself somebody
        who will do the job for cheap.

        When you need some engineering
        and the prices must be down
        that’s the time you get me running,
        cause you know I’ll be arounnnnnnd.

        I’M A FOOL FOR YOUR DIRTY WORK. LOVE THE CHANCE TO DO YOUR DIRTY WORK, OH WOAH”

  20. The big debate we had today was which old Ford concept to use for the topshot. I ultimately went with the 021C because it’s a bright color and just stands out so well, which pissed off Adrian. I’ll let you guess what Adrian picked, what Jason chose, and then would love to hear what you’d have done.

    There were much better choices, if you want to show a Ford concept car that would actually make for an efficient EV.

    -1981 Ford Probe III (0.25 Cd)
    -1982 Ford AFV
    -1983 Ford Probe IV (0.152 Cd)
    -1984 Ford Probe V (0.137 Cd)
    -1996 Ford Synergy 2010 (0.20 Cd)
    -2000 Ford Prodigy (0.199 Cd)
    -2006 Ford Reflex

    Many more to choose from, all from Ford. Yet these sorts of figures NEVER seep into their actual products, because they always have to ruin them with styling bullshit to conform to whatever styling zeitgeist dujour has been deemed to be in vogue by upper management… just like all the other automakers.

    What to compete with China? You need efficiency to get the cost per mile of range down which will allow for a smaller/less-expensive/lighter battery pack. Want efficiency? Drag reduction is the easiest and least expensive way to do it, and by needing a smaller battery pack for a given range, mass reduction will naturally follow yielding yet more efficiency.

      1. If they have their shit together and are really serious about this, then the drag figures are going to be much closer toward the Ford Probe V end of the aerodynamic spectrum than to the current industry average, out of economic necessity. This probably means 14″ wheels, rear wheel skirts, and no front grille(as an EV, it doesn’t need it).

        A small 30 kWh battery is more than enough for a 200 mile real-world highway range if you design the car right, and this can be done by making a sedan with lots of leg room that can comfortably seat 5 larger adults. Go to a liftback hatch for the rear storage access and it will be almost as practical as a hatchback, to boot.

          1. The Probe V had about 25% less drag than the EV1. The flexible front wheel skirts were not practical to implement, but the wheel fairings on the previous Probe IV that moved with the steering and wheels were doable, and that Probe IV also had significantly less drag than the EV1, nearly a decade before the Impact existed. Plus the Probes could seat 4 or 5 people, unlike the EV1.

      1. Even without any wheel skirts, values around 0.19 or even below are still possible, and with only rear wheel skirts but no front, we can get into the mid 0.1X range.

        Smaller wheels helps tremendously with keeping drag low. We really don’t need larger than 15″.

        1. Agree with all of that. I’ve heard multiple times that the larger wheels are at least in part to allow for bigger brakes, but I wonder why? The brakes on my ’78 Cougar (front discs, big rear drums, 15″ wheels) were good, as were the brakes on my ’89 F150. The brakes on my ’92 Accord (four wheel discs, 15″ wheels) were fantastic. But those were all designed before asbestos was regulated out of brake pads.
          Do newer bake materials need larger surfaces for heat rejection? I honestly don’t know, and I’d love it if a subject matter expert would explain it.

          1. The latter paragraph is a good question. I don’t know the answer to it.

            But it must be said that many of the steel-bodied musclecars of the 1960s weighed the better part of a ton less than the modern plastic-fantastic 4-cylinder econoboxes of today. That would have a lot to do with necessitating larger brakes.

  21. I can’t decide which sounds like a worse decision – buying a Ford that was designed to be cheap, or buying an expensive Ford, that was also designed to be cheap.

  22. If Ford had offered an affordable (for me defined as under $25k out the door without mucking about with tax credits I may or may not qualify for) small electric car with adequate range (for me that’s 200 miles) in 2018 I’d have probably bought that instead of my Fiesta ST. Hopefully I’ll get another ten years or more out of the FiST but when I replace it I’d like to go electric.

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